Linh Nguyen

MediumDraftingProspect

Schedule CMarried filing jointlyTXMeera KapoorAnnualReturn on file

Est. current income

$228,000

vs $196,000 prior year

Effective rate

20.8%

Marginal bracket

24% ordinary

Dec 31 hard stops

Linh Nguyen

2026 Year-End Planning Summary

Dec 31 stops

~$6K–$12K of federal tax addressed (equipment expensing, small Q4 estimate) plus §199A preserved, with payroll/credit setup for the first hire.

Est. income

$228,000

vs $196,000

Effective rate

20.8%

Marginal

24% ordinary

Key changes

flagged

1. Current-Year Action Items

Time-sensitive moves before December 31.

Expense the equipment under §179 / 100% bonus depreciation

Dec 31 hard stop

Client response: "I'm planning to buy equipment for the business this year."

Qualifying equipment placed in service by Dec 31 can be fully expensed via §179 (income-limited) or 100% bonus depreciation (not income-limited, permanent under OBBBA). At the 24% rate the benefit is real though smaller than for higher-bracket clients; the property must be in service, not merely ordered.

$4,000–$9,000 of federal tax reduced

Assumes ~$25K–$45K of qualifying property placed in service by Dec 31, expensed at the 24% rate via §179 and/or 100% bonus depreciation (permanent post-OBBBA). §179 is limited to business income; bonus is not.

Without action

Deduction deferred (or lost this year) if the equipment isn't placed in service by Dec 31.

With the plan

$4K–$9K of tax reduced by full expensing this year.

DeadlineDecember 31, 2026

OwnerBoth

AuthorityIRC §179IRC §168(k)

Small Q4 estimate to reach the safe harbor

PYR + current estimate: income up; estimates slightly short of 110%.

A modest income increase leaves a small §6654 gap. A small Q4 payment closes it; the equipment deduction reduces total tax and may eliminate the need entirely.

$150–$500 of penalty avoided

Assumes the §6654 safe harbor — 110% of 2025 tax ($30,600) = $33,660 — is not yet met; $32,660 paid through Q3 leaves a $1,000 gap (before any equipment deduction, which reduces it further).

Without action

~$1,000 short of the safe harbor; small §6654 penalty.

With the plan

Safe harbor met; penalty avoided.

DeadlineJanuary 15, 2027 (Q4 voucher)

OwnerBoth

AuthorityIRC §6654

2. Long-Term Opportunities

Multi-year planning to revisit beyond this season.

First-employee setup — payroll, withholding, and credits

Client response: "I think I'll hire my first employee soon."

A first hire converts a sole proprietor into an employer with withholding, FUTA/SUTA, and workers'-comp obligations — non-optional and best set up before the first paycheck. If the employee is from a WOTC targeted group, Form 8850 filed within 28 days can secure a credit. Getting this right avoids penalties and captures any available credit.

Compliance + possible hiring credits (situational)

Assumes establishing payroll (federal/state withholding, FUTA/SUTA, workers' comp) and evaluating the Work Opportunity Tax Credit if the hire is from a targeted group. Value is compliance plus a potential credit up to $2,400+ per qualifying hire.

Without action

Missing payroll setup or the 28-day WOTC window risks penalties and forfeits any credit.

With the plan

Compliant payroll from day one and any WOTC credit captured.

DeadlineBefore the first paycheck

OwnerBoth

AuthorityIRC §3402IRC §3301IRC §51 (WOTC)

3. Open Questions for the CPA

Items to resolve before the client conversation.

Entity choice — revisit S-corp election as income grows

As Schedule C net earnings grow, an S-corp election can reduce self-employment tax on the distribution portion, but only once profits comfortably exceed a reasonable salary and justify the payroll and compliance overhead. Worth modeling for next year rather than rushing this year.

OwnerCPA

Elan

Grounded on Linh Nguyen

Nothing outstanding for Linh Nguyen right now.

Elan brought this to you

Nothing needs you for Linh Nguyen right now.